Euro to US Dollar Exchange Rate Pressured by Dovish European Central Bank Comments
Despite market sentiment improving again today, the Euro to US Dollar (EUR/USD) exchange rate has seen mixed movement and remains under pressure. Investors are hesitant to buy the Euro due to continued dovishness from the European Central Bank (ECB).
Last week saw EUR/USD tumble from the week’s opening level of 1.1874, after briefly touching on a two month high of 1.1896.
While the pair spent the week lower, it rebounded slightly towards the end of the week and climbed back from its weekly lows. Ultimately, EUR/USD closed the week near the level of 1.1835.
Since markets opened today, EUR/USD has seen fairly tight and volatile movement. After a brief advance earlier in the day, EUR/USD is currently trending just below the week’s opening levels again.
Euro (EUR) Exchange Rates Unappealing as ECB Officials Favour More Easing
The Euro is struggling to hold near its best levels against its rival the US Dollar, despite higher market sentiment on coronavirus vaccine developments today.
This is partially due to fresh comments from European Central Bank (ECB) officials. ECB officials indicated today that the bank would likely continue to ramp up easing policy to protect the Eurozone from the impact of the coronavirus pandemic.
According to ECB member Paolo Hernandez de Cos, the bank remained concerned about currency strength too:
‘The European Central Bank’s (ECB) governing council should increase the monetary accommodation to avoid market fragmentation given the worsening outlook for both the economic activity and inflation,
Foreign exchange moves between the US Dollar and the Euro is something to worry about’
US Dollar (USD) Exchange Rates Benefit from Moderna Vaccine News
While the US Dollar is a currency often correlated to market safe haven demand, it is still benefitting from today’s boosted market sentiment.
The US Dollar is up in reaction to today’s news that biotech firm Moderna had made major progress on its own coronavirus vaccine trials.
As Moderna is a US firm, the news was especially optimistic for the US economic outlook.
Concerns about how a vaccine could be distributed are also keeping markets anxious, which is making safe havens like the US Dollar fairly appealing.
Euro to US Dollar (EUR/USD) Exchange Rate Could Fall Further if US Data Impresses
Tuesday’s American session will see the publication of one of this week’s most influential datasets. US retail sales data from October could be highly influential to the US Dollar outlook if it surprises investors.
If US retail stats impress investors, it could boost hopes that the US economy is weathering the coronavirus pandemic. This would leave the US Dollar more appealing.
Tomorrow will also see the publication of US industrial and manufacturing production figures, which may also influence the US Dollar’s movement.
More speeches from European Central Bank (ECB) officials are expected tomorrow as well. This includes a speech from President Christine Lagarde.
The Euro’s movement is most likely to influenced by ECB speculation and rival movement in the coming days.
Of course, continued reaction and speculation over coronavirus vaccine news will drive the Euro to US Dollar exchange rate as well.